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OPINION

Commentary: Sky isn’t falling with Comcast/TWC merger

Histrionic warnings of a cable “monopoly” have all the credibility of Chicken Little.

When the Sherman Antitrust Act passed in 1890, its advocates promised a classically conservative use of law to keep markets competitive and free. But today, federal anti-trust law distorts the market, exacts concessions under penalty of law and has become a forum for rent-seeking by competitors, who hope to leverage government intervention when they cannot win in the marketplace.

Exhibit A is the proposed merger of Comcast and Time Warner Cable (TWC). Whether because of a reflexive reliance on government meddling or a myopic trust in central planning, the critics of a combined Comcast-Time-Warner seek government intervention by crying “monopoly,” aka “the sky is falling.”

Competition in the video/communications market is volatile, and consumer choice will only increase. In recent years, satellite companies added 7 million subscribers and phone companies more than 10 million, while cable lost more than 10 million. Cash-rich entrants like Google are rapidly expanding into 34 markets with 150 HD channels, and online competitors — Netflix, Hulu, Amazon, and perhaps Yahoo — are booming. If this is what a monopoly calling for antitrust intervention looks like, it is an exotic and strange one.

Clearly, the cable industry is in a state of upheaval, buffeted by competition from satellite companies, like Dish and Direct TV; telephone company offerings like Verizon FIOS; ever-rising programming costs from programmers, like Disney and Viacom; and online video services, like Netflix and Amazon. Whereas cable once boasted 95 percent of all households wired for video, today that market share for cable as a whole is 60 percent and falling.

Even the market for connection on the Internet’s back end is a vibrant free market producing more effective technologies. As a result, prices have dropped 99 percent in the last 15 years. Yet, even with these price decreases, Netflix proposes a government rule barring ISPs from charging even the heaviest traffic drivers to cover the costs of their data transmission (wouldn’t you know, Netflix generates a third of Internet traffic during peak hours today). Netflix tries to portray its request as a “net neutrality” problem, but it’s really just a case of a company requesting the government to support its business model.

In reality, there are more video offerings from more outlets carrying more high-quality programs than ever. A half-century ago, FCC Commission Chairman Newton V. Minow called television a “vast wasteland.” Today, from “Breaking Bad” and “Downton Abbey” to edgy dramas like “Game of Thrones” and “True Detective,” television is gradually displacing films as the place many creative directors, producers and actors go to shine. Plus, broadband technology continues to evolve, spurring an increase in both infrastructure deployment and download speed.

With the market in constant fluctuation, there is no threat of broadband or video markets being dominated by Comcast. America is one of only two nations with three fully deployed broadband technologies competing for customers nationwide — cable, telephone and wireless 4G LTE. Considering these competitive technologies, Comcast/TWC will have, post-transaction, just a 20 percent market share. In the pay-TV market, even after the transaction, Comcast will have less than 30 percent of the pay-TV market — below the FCC’s own misguided 30-percent ownership cap, which the federal courts twice invalidated as irrational.

The days of the cable franchise dictated by local governments ended in 2006. That is why Americans experience three fully deployed broadband networks, and why cable is not the only game in town. Perhaps Comcast does pass 60 percent of homes in the U.S., but just because 60 percent of homes can choose Comcast does not mean that they do.

We are a far cry from a three-channel television set, the remote clicker, and “Hogan’s Heroes.” The modern media universe is diversified not only by provider and platform options, but also consumer choices that provide of high-speed broadband, 500 channels, online video and the highest quality programming in the industry’s history. The free market brought us these innovations, and we should allow free market to determine the future of television, not the government.

Antitrust laws should not be manipulated as a pretext to justify more central control and command of the economy by government bureaucrats.

If critics can’t show in clear and demonstrable terms how consumers are harmed, then Congress and the administration should let companies do what is best for their customers and subscribers, including combine and merge.

Grover Norquist is president of Americans for Tax Reform. Katie McAuliffe is executive director of Digital Liberty.